Ukraine lacks legislative mechanisms to punish individuals and businesses who violate sanctions linked with Russia’s annexation of Crimea. This, however, is only part of the problem, since there are a suspicious number of individuals or legal entities, sanctioned by the USA over Crimea, who are eluding inclusion in Ukraine’s list of offenders.

Valentina Samar from the Centre for Journalist Investigations has carried out a major investigation into who is slipping off the radar in Ukraine, and why. Despite the promises issued by Ukrainian President Petro Poroshenko to increase sanctions against Russia and to synchronise the US and Ukrainian sanction lists, these remain just words. At present a considerable number of Russian companies; public figures and businessmen, sanctioned by the USA, are not subject to any Ukrainian sanctions.

The Centre for Journalist Investigations compared the list produced by OFAC, the Office of Foreign Assets Control of the US Department of the Treasury and that drawn up by RNBO, Ukraine’s National Security and Defence Council, and found 40 companies and 25 officials and businessmen from Russia whom RNBO had somehow ‘forgotten’. And this, Samar points out, was after RNBO was forced to ‘clarify’ its list after MP Serhiy Leshchenko pointed to omissions in June this year.

Leshchenko is not the only MP concerned by such omissions. Svitlana Zalishchuk has also sought to challenge Poroshenko on the ‘holes’ in Ukraine’s sanction list. The fact that some companies and individuals have been omitted, she says, indicates that there are those for whom this is convenient.

The updated list published in June had still omitted certain Russian oligarchs, such as Oleg Deripaska, Igor Rotenberg and Viktor Vekselberg who are all on the OFAC list and for very good reason. This was despite assurances given by Poroshenko on 10 April 2018, during talks with Germany’s Chancellor Angela Merkel.

Samar notes that the oligarchs were subsequently added to Ukraine’s list, however some of their companies remain stubbornly missing to this day. This is despite the fact that the USA refused to remove six aluminium companies belonging to Deripaska from its black list even after Deripaska reduced his share in them.

The list of omissions includes, quite incredibly, “СГМ-Мост”, a main company involved in Russia’s illegal construction of a bridge from Russia to Crimea. “СГМ-Мост” is a daughter company of Stroygazmontazh, owned by Arkadiy Roterberg, a man close to Russian President Vladimir Putin, who has been under sanctions since 2014.

It is no less disturbing that RNBO has not seen fit to place the company «Силовые машины» owned by Oleksiy Mordashov under sanctions. This company was involved in the delivery to Crimea, bypassing international sanctions, of Siemens gas turbines in July 2017.

At least seven companies owned by another Putin oligarch crony, Gennady Timchenko, have also been omitted, as have companies from the group “Совфрахт – Совмортранс”, which are involved in transportation of both military and civilian loads to Crimea.

The list of individuals whose activities the National Security and Defence Council has not seen the need to impose sanctions on is also staggering. If the omission of Vladyslav Surkov, Putin’s ‘aide’ on occupied Donbas, could just conceivably be aimed at not obstructing negotiations on the release of hostages and political prisoners, there is no good reason for the failure to include Yevgeny Prigozhin. This individual, often referred to as ‘Putin’s chef’, went from serving a long prison sentence for serious crimes and then selling fast food on the streets, to become a billionaire. He is presumably paying for his vast wealth by funding the notorious Internet ‘troll factory’ in St. Petersburg, and the Wagner unit which sends highly-trained mercenaries to kill Ukrainians in Donbas.

Attempts to attribute all these omissions to poor coordination between different departments are hampered by the fact that “all the above-mentioned Russian oligarchs had or still have considerable assets in Ukraine which they were allowed to either sell or to move to offshore companies”.

Mykhailo Honchar, President of the ‘Strategy XXI’ Centre for Global Studies, believes that Ukraine’s inadequate policy on sanctions can be attributed to ties that were built over decades. Many of these links were particularly cemented during the Putin years, and cover both the previous regime under Viktor Yanukovych and those now in power.

The fact that many Ukrainian oligarchs and politicians have financial interests in Russia should also not be forgotten. In both this and an earlier study, the Centre for Journalist Investigations probed the manner in which Rinat Akhmetov, Ukraine’s richest oligarch, has managed to bypass sanctions on Crimea (to be reviewed separately).

Samar points out that Ukrainian oligarchs, like Akhmetov and Dmitry Firtash, and politicians have also received the possibility to carry on business in Crimea which western sanctions prohibit via a highly controversial ‘law on making Crimea a free economic zone’. The law was condemned by human rights groups back in 2014 both because it discriminated against Crimeans and because it made it possible for Ukrainians to continue business as usual on occupied territory, thus aiding the aggressor state (details here).

It is such measures and those who benefited from them that clearly demonstrate what Samar calls “the deliberate inadequacy of Ukraine’s sanction policy”.

Zalishchuk notes an important aspect to all of these shenanigans, namely the damage they do to all Ukraine’s diplomacy. Those now protesting against North Stream 2 and awaiting sanctions from USA against European companies involved in it can be confronted with legitimate questions about Ukraine’s sanction policy which selectively imposes sanctions so as to not hurt the economic interests of certain Russian oligarchs or companies, or Ukrainian-Russian companies.

Another problem lies in the lack of any mechanisms in Ukrainian legislation for punishing those who violate sanctions. There are quite simply no administrative or criminal penalties envisaged. Ihor Ponovovny, Deputy Prosecutor for the Autonomous Republic of Crimea, explained in an interview to the Centre for Journalist Investigations, that, given the lack of a relevant article to Ukraine’s Criminal Code, all they can do is, for example, to accuse boats of illegally entering occupied territory or of violating Ukraine’s state border (Article 332-1 of the Criminal Code, introduced in July 2014).

A glaring example of how inadequate this is was seen in Ukraine’s arrest in February 2018 of Nefterudovoz 45М when it tried to moor in Kherson Port after having shipped a large amount of ilmenite ore from Turkey to occupied Crimea. It was reported at the time that the only enterprise in Crimea using such ore was the ‘Crimean Titan’ factory belonging to Ukrainian oligarch Firtash. Shortly afterwards, a Ukrainian court revoked the boat’s arrest.

Ponochovny provided a list of companies who are known to be infringing western sanctions in occupied Crimea, but whom they have no way of prosecuting. This, he says, is also because Ukraine has not introduced any sectoral sanctions.

They have tried to initiate criminal proceedings against Peugeot, the Auchan supermarket chain and the Internet site Booking.com for enabling people to book hotels, etc. in Crimea. All of these and other forms of business activity are in clear breach of sanctions, yet can seemingly not be touched. As well as the lack of sectoral sanctions, Ponochovny also mentions the Law on making Crimea a free economic zone which, four years after Russia’s illegal invasion and annexation of Crimea and in spite of mounting human rights violations, is still giving carte blanche to Ukrainian business activities on occupied territory.